Uniqlo reported a drop in profits
2023.01.12 03:55
Uniqlo reported a drop in profits
By Kristina Sobol
Budrigannews.com – Uniqlo’s owner, Japan’s Fast Retailing Co., reported on Thursday that earnings for the first quarter fell 2 percent due to domestic weakness and persistent COVID-19 restrictions in China.
The company reported operating profit of 117.1 billion yen ($889.82 million) in the three months ended November, up from 119.4 billion yen a year earlier, a day after announcing plans for significant wage increases.
The average of five estimates from analysts gathered by Refinitiv indicated that the consensus forecast was for 135.3 billion yen.
While COVID restrictions continued to weigh on China, including the temporary closure of 247 stores in Beijing and Guangzhou, domestic results were impacted by warmer weather in November, which stifled sales of fall and winter apparel.
“We think a normal operations will come back on the Chinese mainland once ‘with corona’ lifestyles take root,” CFO Takeshi Okazaki told reporters.
All other regions saw an increase in sales and profits. The company maintained the 350 billion yen operating profit forecast for the entire year.
On Wednesday, the company—the largest retailer in Japan—announced that it would increase wages for its employees by as much as forty percent, causing outrage across the nation. Policymakers, who had been urging employers to raise wages to help offset the highest inflation in a generation, were greatly pleased by this.
Mark Chadwick, an independent equities analyst who publishes on the Smartkarma platform, stated, “From a macro perspective, this move highlights that it is becoming increasingly difficult for Japanese companies to attract and retain workers.” Mark Chadwick made the statement.
Last fiscal year, Fast Retailing, which owns and operates more than 3,500 clothing stores all over the world, made a record profit as growth in North America and Europe made up for a decline in China.
The company is regarded as a benchmark for the Chinese market, where it operates nearly 900 Uniqlo stores—more than in Japan—and produces many of its products.
In comparison to a benchmark index that remained unchanged, Fast Retailing’s share price dropped by 2% in Tokyo trade.
